Fed Hikes Interest Rates Amid Inflation Worries

The Federal Reserve raised its benchmark interest rate by one-quarter of a percentage point on Wednesday. This marks the first increase since 2023, despite President Donald Trump's calls for lower borrowing costs.

The unanimous 12-0 decision lifted the federal funds rate to a range of 3.75% to 4%. Fed Chair Kevin Warsh said that 'the Committee decided to raise the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent, in support of the Federal Reserve's dual mandate.'

The increase came after weeks of market expectations that policymakers would act to counter inflation. The Fed had held its benchmark rate steady in late July, but investors pushed longer-term borrowing costs higher in the following weeks.